Does anyone know of a program or utility that will turn my Magic Mouse into a touchpad (I'm running OS 10.5.8)? That is, with the nice multi-touch surface, why not just use all of the MacBook gestures (most importantly moving the pointer and tap-to-click/tap-to-click-drag) and ditch the need to actually move the mouse around? This way you could use the mouse just holding it in your hand.
BetterTouchTool adds many new, fully customizable gestures to Magic Mouse and Macbook Touchpad
This is answer is a bit late, but in case you never found it:
Mouse Wizard works wonderfully well and has a mode that does exactly what you're looking for. You turn the mouse sideways and use it as a normal trackpad. I actually combine that with another program, so that I can use it as a trackpad and retain two-finger-scroll capabilities.
I'm not sure if this is exactly what you wanted, but you could try Jitouch. I think it is a fantastic app. Adds tons of extra gestures to your magic trackpad and mouse. I'm not sure if it allows you to use your finger to move the pointer though.